PETALING JAYA: Penang has continued punching above its weight economically, contributing 7.6% of Malaysia’s gross domestic product (GDP) in 2024.
Anchored by its manufacturing (46.1%) and services sectors (48.1%), its growth has outpaced Malaysia over the long-term and continues to remain resilient.
As Malaysia’s premier semiconductor and electrical and electronics (E&E) hub, the state is strategically positioned to capitalise on long-term growth drivers such as artificial intelligence (AI), advanced manufacturing and global supply-chain diversification.
In 2024, Penang’s E&E segment contributed RM41.7bil to the state’s GDP.
RHB Banking Group recently hosted the Penang Economic Forum 2026 which brought together various stakeholders from across the board.
During the forum, multiple panel sessions were held which discussed topics surrounding Penang’s transition towards a higher-value economy, small and medium enterprise (SME) competitiveness, sustainable growth and funding accessibility.
“Panellists emphasised the need to move beyond the traditional low-cost manufacturing model towards higher value activities centred on 4T’s – talent, technology, things (product and services), and trademarks,” RHB Research said.
It added that supply chain diversification and geopolitical tensions have created opportunities for a technology transfer, collaboration and business relocation.
Another key topic discussed was how the state can unlock growth capital beyond just bank financing.
“Alternative funding channels such as venture capital, private equity and capital markets can support businesses at different cycles, so efforts to strengthen the funding ecosystem is important,” it noted.
As for SMEs and micro, small and medium enterprises (MSMEs), the panellists acknowledged that they remained a vital pillar of the economy, and have accounted for 96.1% of total business establishments while contributing RM652.4bil to the country’s GDP in 2024.
“Supported by more than 350 multinationals and over 6,500 manufacturing-related SMEs, Penang has developed one of Malaysia’s deepest industrial ecosystems, fostering technology transfers, capability upgrading, and innovation.
“Moving forward, SMEs are expected to play an increasingly important role in supporting higher value-added and innovation-driven industries.”
It’s worth noting that Penang ranks among the top four states in Malaysia for MSME employment, supporting approximately 469,900 jobs.
RHB Research said the state also generated RM91.5bil in MSME gross output, accounting for 7.2% of the country’s total MSME output.
The state has also continued to attract foreign direct investment despite global uncertainties – approved foreign direct investment (FDI) hit RM15.2bil in the first nine months of 2025, driven primarily by the the E&E, machinery and equipment and chemicals sectors.
“The United States remained the largest source of FDI, followed by China and the Cayman Islands.
“Subsequently, increasing investments in transport equipment and fabricated metal products are reflecting the broadening depth of the state’s manufacturing ecosystem,” RHB Research said.
Penang is also one of the main logistics hubs in the country, anchored by the Penang International Airport (PIA) and North Butterworth Container Terminal.
The state has continued to see an increase in tourists, supported by its diversity in offerings.
RHB Research said passenger traffic at PIA went up 10.5% in the first half of 2025 while cruise arrivals at Swettenham Pier grew 39.7% in 2024, reflecting improving travel demand and connectivity.
“Supported by Visit Malaysia 2026 initiatives, expanding international flight networks and the Malaysia-China mutual visa-free regime, Penang is well positioned to benefit from higher visitor arrivals and tourism spending, reinforcing the sector’s contribution to the state’s services economy,” the research house said.
Meanwhile, the Penang Economic Forum 2026 also highlighted how businesses need to be adaptive and resilient so that productivity and cash flows can be managed.
RHB Banking Group laid out potential key beneficiaries, among them included Pentamaster Corp Bhd
, Cnergenz Bhd, Inari Amertron Bhd and QES Group Bhd.
